Overstock.com nixes New York affiliates to frustrate taxman

New York's state legislature passed a law that will require Internet vendors with any business ties to the state to collect sales tax. The law is so sweeping that it includes nonphysical ties, such as affiliate-marketing programs, which pay a slice of sales to websites which refer customers to an online store. Amazon.com responded with a lawsuit. Now Overstock.com says it's cutting loose its 3,400 affiliates in New York. The idea is to show "the New York governor and legislature that this is bad for New York businesses," Overstock VP Jonathan Johnson told the New York Times. "There are affiliates in New York who will see their business go away because of a not-so-thoughtful action by the New York State legislature." Amazon will keep its affiliates and begin paying sales tax June 1. New York hoped to increase its tax revenues by $50 million with the measure. Overstock's letter to affiliates is included below: